U.S. Treasury & IRS Propose New Crypto Tax Rules to Boost High-Income Compliance
In Brief
Today, the U.S. Treasury and the Internal Revenue Service issued newly proposed crypto tax rules.
The proposed regulations require brokers to report customers’ digital asset transactions on or after Jan 1, 2025.
These brokers would include crypto trading platforms, digital asset payment processors and certain wallet providers.
Today, the United States Treasury and the Internal Revenue Service (IRS) proposed new crypto tax regulations.
According to the announcement, the new regulations will require brokers to report clients’ digital asset transactions occurring on or after January 1, 2025, using the new Form 1099-DA.
“These proposed regulations are designed to help end confusion involving digital assets and provide clear information and reporting certainty for taxpayers, tax professionals and others,” IRS Commissioner Danny Werfel said in a statement.
“A key part of this effort fits in with the larger IRS compliance focus on wealthy taxpayers. We need to make sure digital assets are not used to hide taxable income, and the proposed regulations are designed to provide a clearer line of sight into activities by high-income people as well as others using them.”
Scheduled for publication on August 29, the forthcoming regulations state that the term “brokers” will encompass crypto trading platforms, digital asset payment processors and specific wallet providers.
Real Estate Entities Required to Report Digital Asset Payments
Under certain conditions, brokers would also be required to furnish gain/loss and basis specifics for sales occurring on or after January 1, 2026, in these informational submissions.
This measure guarantees that customers have the essential data for their tax filing preparations.
The new regulations would extend to real estate reporting entities (including title companies, closing attorneys, and mortgage lenders) regarded as brokers in digital asset dispositions. These entities must report digital asset payments made by real estate buyers for transactions that conclude on or after January 1, 2025.
Moreover, they must incorporate the fair market value of digital assets for sellers on Form 1099-S, which applies to deals sealing on or after January 1, 2025.
The proposed rules also detailed the process for computing profits or losses, determining initial value, and applying backup withholding for digital asset sales and exchanges. In addition, they introduce several clarifications aimed at fostering understanding and ensuring adherence to tax requirements.
The proposed regulations are yet to be finalized. Written comments on these regulations can be submitted until October 30, 2023.
A public hearing is set for November 7, 2023, with a second session slated for November 8 if additional speaking requests surpass capacity for a single day.
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About The Author
Cindy is a journalist at Metaverse Post, covering topics related to web3, NFT, metaverse and AI, with a focus on interviews with Web3 industry players. She has spoken to over 30 C-level execs and counting, bringing their valuable insights to readers. Originally from Singapore, Cindy is now based in Tbilisi, Georgia. She holds a Bachelor's degree in Communications & Media Studies from the University of South Australia and has a decade of experience in journalism and writing. Get in touch with her via cindy@mpost.io with press pitches, announcements and interview opportunities.
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Cindy is a journalist at Metaverse Post, covering topics related to web3, NFT, metaverse and AI, with a focus on interviews with Web3 industry players. She has spoken to over 30 C-level execs and counting, bringing their valuable insights to readers. Originally from Singapore, Cindy is now based in Tbilisi, Georgia. She holds a Bachelor's degree in Communications & Media Studies from the University of South Australia and has a decade of experience in journalism and writing. Get in touch with her via cindy@mpost.io with press pitches, announcements and interview opportunities.
